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Euro MPs rebuffed as Court declares 1995 budget invalid

THE European Parliament and EU governments will have to draw up a new 1995 budget within the coming weeks after the European Court of Justice (ECJ) declared the 80-billion-ecu version adopted by MEPs last December invalid.

The judgement is a rebuff for the Parliament, which had made changes to agricultural spending – normally the preserve of governments, not MEPs.

But the dispute between the two institutions over their respective budgetary powers will not affect Union spending, which is almost completed for this year.

In annulling the budget, the ECJ explained that the Parliament’s President Klaus Hänsch was not legally able to adopt it because agreement between the two institutions on the budgetary ceiling for 1995 and on the classification of certain types of expenditure was absent.

It ruled that the Council of Ministers and the Parliament should both comply with the judgement and pick up the 1995 budgetary procedure at the stage it had reached last year just before its final adoption. Both institutions are now preparing to make the technical adjustments needed for a legal budget.

These alterations will need to be completed by February to allow the 1995 accounts to be closed.

This will involve changes to the 131 amendments which MEPs made to EU spending on international fisheries agreements and on guaranteed prices for the Union’s farmers. In particular, MEPs had specified that 1 million ecu be allocated to a fishing agreement with Russia and had attached specific remarks to certain categories of spending.

The judges expressly avoided the risk of any budgetary chaos stemming from the ruling by stating that the requirement to ensure the continuity of the European public service, the need for legal certainty and the virtual end of the financial year meant that the basic spending agreed for 1995 should stand.

The case was brought by the Council of Ministers earlier this year on the grounds that the European Parliament had changed expenditure which could only be determined by governments, and MEPs had not acted in good faith “by unilaterally and arbitrarily proceeding to reclassify compulsory and non-compulsory expenditure” in a way which contravened previous agreements between the two institutions.

Last week’s judgement, which came just days before MEPs were due to decide on the Union’s 1996 budget, steered well clear of tackling the fundamental bone of contention between the institutions: who has the right of final say over certain aspects of EU spending?

Under Union rules, the last word on non-compulsory spending in areas such as regional and social programmes rests with MEPs. But this right lies with governments in the case of compulsory expenditure, essentially the Common Agricultural Policy (CAP) which is expressly cited in the EU’s Treaty of Rome.

But as the balance of EU spending shifts so that the share allocated to the CAP continues to decline – from almost 70% a few years ago to nearer 50% now – MEPs are keen to end the distinction between the two categories.

The Commission, which has watched the power battle from the sidelines, said after the ruling that a fundamental debate on the whole system for classifying EU expenditure should take place next year when the lengthy process for drawing up the 1997 budget begins.

It is also inevitable that the issue, which is one aspect of the fundamental balance of power between the Parliament and the Council of Ministers, will now feature in next year’s Intergovernmental Conference on the reform of the Maastricht Treaty.